Nowadays, you can trade an array of assets on alternative exchanges, ranging from intellectual property rights and bankruptcy claims to tickets to sporting events. Recently, I spoke to Jim Downs, CEO of Connamara Systems, a company that provides technology to these marketplaces, to learn more about what’s under the hood.

Connamara offers a matching engine with similar functionality to what you’d find on any electronic stock or futures exchange. Buyers and sellers use a web interface to enter orders into a central limit order book, and when prices cross, trades are executed on a price-time priority basis. They also can view their positions and working orders.

Just about any alternative exchange can use Connamara’s solution. What’s really interesting is that Connamara can customize both the front and back end to meet the exchange’s unique needs. Additionally, when it licenses the trading platform and the matching engine, it includes the source code so the exchange can leverage their own development and IT teams in the future. Moreover, they can get up and running fast: it only takes about four to six months to implement the technology.

One Exchange Street, an alternative exchange for online bankruptcy claims trading, is in the early stages of launch. With Connamara’s technology as the foundation, its model is to provide price discovery and real-time trade execution via standardized claim transfer agreements to buyers and sellers of bankruptcy claims. The trading interface allows users to list, offer and trade their bankruptcy claims via the Internet. The back-office administration, claims verification and trade settlement functionality supports post-trade processing. Connamara also provides technical and operational support.

The front end needed to be customized because bankruptcy claims aren’t fungible. Let’s say a couple investors hold claims against two bankrupt companies. Although the claims are very similar and would likely be paid out at the same percentage, the investors can’t buy one, sell the other and have a flat position. They would have two open positions instead. Connamara customized the platform to have parent and child limit order books. That way, an investor could place a bid or offer on a particular class of claims at a given price, and it would be reflected in the order books of all the individual claims. It also set up the platform so users could find supporting documents pertaining to a claim, such as invoices submitted to the bankrupt company.

The Intellectual Property Exchange International (IPXI) is another alternative exchange running on Connamara technology. IPXI launched its first offering in June 2013 covering a portfolio of more than 600 patent assets – including 225 granted patents globally – related to organic light-emitting diode (OLED) technologies for display screen applications. Connamara customized IPXI’s platform so users could view patent and other documents relevant to the transaction.

Connamara also can customize the risk management functionality. For example, it can build in capabilities to qualify users to short-sell a cash instrument.

Additionally, the back end can be tweaked so settlement is manual or automated. One way of making settlement is to enable the money to change hands through an escrow agent with bank notification and have the funds deposited in a trading account. Processes can be put in place to handle payment defaults.

During the startup phase, it’s a significant challenge for alternative exchanges to attract liquidity and get participants that are accustomed to trading in a bilateral environment acclimated to exchange trading. (In fact, One Exchange Street is still seeking the next round of funding, so its official launch is on hold.) That’s all the more reason to partner with a technology company like Connamara so they can concentrate on establishing the core business.

On a final note, there’s plenty of potential for alternative exchanges — even in the consumer space. Football fans in the U.S. may be familiar with Teamtix.com. (Looking for holiday gift ideas anyone?) This site, which doesn’t run on Connamara technology, allows users to buy and sell forward contracts on tickets to college football championship games. If your team makes it to the finals, you’re obligated to pay face value for the tickets — plus you have to pay for the forward contract, of course. If your team doesn’t get to the championship, you lose the amount you paid for the forward contract. Payment and settlement is done through a major credit card.

When it comes to alternative exchange trading, the possibilities are endless. Come up with a good idea, and the technology is there to enable it.